Zillow’s IPO – A Game Changer?

Zillow’s IPO announcement may become a game changer as the Internet continues to dominate the day to day Marketing of Real Estate Properties; a wave a acquisition has taken place in recent months and they all point to a big acquisition in the near future. Zillow Purchased Postlets Inc. just last week and formed a long term Marketing Venture with Yahoo Real Estate to go after the ‘Hyperlocal’ advertising market.

The Zillows and Trulias are trying to fend off the growing assertiveness of Move Inc. (Realtor.com) and its recent acquisitions in the syndication business of Listhub – the question on Business Insiders’ minds is: “What will Zillow use its New Capital for? Will continue on its path of acquisitions? Or will it try to acquire Trulia.com?” – Some have argued that a tinge of friendly animosity may keep the two apart but their true large competitor, being Realtor.com, may lay the track for that possibility.

Most industry insiders were expecting Trulia to be the one to file for an IPO – but Zillow did jump the gun. In the public S-1 filing Zillow is planning to raise $51 Million Dollars – but I expect them to near $100 Million Dollars.

Zillow generated 19.4 million unique users in March 2011, up from 12.7 million at the end of 2010, and 7.6 million in 2009.

Zillow first launched its Mobile Applications in April 2009; 8 Million visitors used them in March 2011.

Zillow was founded by former Expedia executives Rich Barton and Lloyd Frink; it is currently led by 35-year-old CEO Spencer Rascoff. Barton remains executive chairman, while Frink serves as vice chairman and president.

The founders maintain tight control over the company, creating a dual-class structure like Facebook and Google. Co-founders, Rich Barton and Lloyd Fink, own all the Class B shares, and 61% of the Class A stock, so they maintain a total 87% of the voting power. The venture firms all own Class A stock and have just 8% of the voting power, despite investing about $87 million in the company.

The Big Stake players in Zillow are: Technology Crossover Ventures owns 29.9% of the company, while Benchmark Capital has 19%. Hedge fund PAR Capital Management owns another 11.1%. There’s no mention of Legg Mason Capital Management–which led Zillow’s Series C $30 million round in 2007–in the list of shareholders that own more than 5%.

Sales and marketing costs rose 55% to $15 million in 2010, primarily related to headcount expenses and related commissions of $2.3 million as Zillow hired a local sales team to sell and promote Premier Agent, a subscription-based program for real estate agents.

Technology and development costs dropped 5% to $10.7 million. Zillow said its depreciation and amortization expenses related to computer equipment that reached the end of their lives dropped by $1.2 million.

Cash on hand at year-end was $12.3 million, up from $4.4 million a year earlier.

Zillow did not disclose whether it used Stock or Cash to purchase Postlets Inc. Postlets will allow Zillow to expand its social-media reach, since the start-up runs a platform that allows agents, property managers and landlords to distribute their listings across 13 real estate and social media websites, for free.

Zillow (5.44%) Edged Trulia.com (4.76%) in Global Internet Visits as of April 16th, 2011 and came third after Realtor.com (6.20%) – when you consider their partnership with Yahoo Real Estate, who came first (6.96%), you start appreciating the competitive spirit that is happening on the Internet:

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Key Yessaad – Real Estate Internet Strategist

To train, inspire, and coach Real Estate Professionals succeed is my passion. I specialize in Internet Marketing with and emphasis on Google Visibility. My Trainings and Internet Strategies intersect with powerful ideas and Plans of Actions that produce results.